Volatility Cuts through the Euphoria

Not long ago, India was abuzz with excitement over the potential for its first-ever wrestling gold at the 2024 Paris Olympics. Yet, what followed was a series of unexpected and unfortunate events. Vinesh Phogat faced disqualification due to a slight weight change. Amit Rohidas received a controversial red card and potential match ban. Disputed judging marred Nishant Dev’s boxing match. These incidents symbolise the unpredictable challenges our athletes have encountered.

Similarly, the Indian stock market has experienced its own series of setbacks. Recently, investors were jubilant as Nifty touched 25,000 and the Sensex reached 82,000. But like the highs and lows of India’s Olympic journey, the market has faced turbulence. Concerns over a potential recession in the US and fears that the Federal Reserve might be slow to cut rates have cast a shadow. The Bank of Japan’s unexpected rate hike and the unwinding of the Yen carry trade have further unsettled investors. Rising geopolitical tensions have added to the global financial market’s unease.

The pressing question for market participants is: Should we buy during the dip, or is a 2008-like collapse imminent? Many major global indices are down over 10 per cent from their recent highs. Markets such as Japan, US Tech, France, China | Hong Kong and South Korea have seen double-digit falls. Yet, the Indian indices have not fallen substantially. The benchmark Nifty is down barely 4 per cent from its recent highs.